I might be better off as an Umbrella

[dmini]

Lets go back to basics.
Pay calculations should be identical - as near as anything.
Umbrella costs are per week. Over a year, umbrella costs are more than accountancy costs. You haven't even included accountancy costs!
So you could assume accountancy costs at the same per week rate - easy - esp when you are paying £35 a week!
Register for VAT and flat rate, and you make a little each week. I make £150 a month
Register for PAYE online - another £150 in the year.

Your link does not show 2% difference anywhere that I could see. Put some decent comparable figures up & we might be able to point out where you have gone wrong.

[VectraMan]

The PAYE bit was purely as an example... who wants to be PAYE

According to that link, I'll loose 2% extra in deductions..

Why can't people spell "lose" on the internet? It's really not a complicated word.

An umbrella can only do exactly the same as a Ltd. in terms of expenses etc., but if you have a Ltd you get to claim back the VAT (which is something umbrellas keep quiet), and you get to pay yourself as a mixture of low salary and dividends which even at low rates is easily worth £500 per month. No contest really.

It's only if you're caught by IR35 that an umbrella is as near the same as to make it not worth the hassle of going Ltd.

[Moff]

I seem to not be coming across to clearly....

I have been a contractor for years, only now have I decided to think about using my LTD company.

The spreadsheet I have attached includes the £35 a week accountancy fees (1st line on there).

All I want to know is how much better off, if at all I will be if I used a LTD company, as from the information I have found I won't be. This is something I have no knowledge on so possibly using wrong terminology

Moff

[VectraMan]

That spreadsheet you've attached isn't for an umbrella (as in the likes of Parasol) but for the composite type scheme that most people will tell you is extremely dodgy and highly likely to be investigated as it only exists to avoid tax. The figures for the "umbrella" will be more or less the same as what you can do with your own Ltd., whereas the PAYE side are for the absolute worse case of working through an agency as PAYE - which nobody with any sense would do.

If you add the expenses from the left hand side to the right hand side, you'll get roughly what an honest umbrella would pay you, or roughly what you'd get if you're caught by IR35.

Either way, you've been given some bad advice or haven't grasped what people are telling you.

[Moff]

This is through Giant acting as my umbrella company, details are here

http://www.giantgroup.com/umbrella/giantumbrella.asp

They also have insurance against IR35 which is included in the fee I pay them weekly.. http://www.giantgroup.com/limited/giantguarantees.asp

I'm glad I came on here, as if I am doing something vitally wrong with them, then there are many tens of thousands of other people on their books

Moff

[Cowboy Bob]

Be very careful with Giant. If you do any kind of rudimentary searching here and elsewhere you'll find that a lot of very uncomplimentary stuff is said about them. For example - http://forums.contractoruk.com/thread9454.html

[Moff]

Thanks for that link... might send it to my CSM

I do agree, they are a little bit lapse on the phone sometimes, but all I care about is being paid... and paying as little tax as possible as we all do

Has anyone had any big tax bills because of them ?

Moff

[dmini]

You need to do the following:
Spreadsheet -
Umbrella 1 side (giant if you must) - including what they charge to pay you.
Limited the other side- payment on the same means. I would expect you NOT to be paying £1800 in accountancy charges though. (35*52). I - and most on this board would pay FAR less than that!
Payment by the same strategy for umbrella & ltd - salary +divi or whatever
Dont forget to factor in your IR35 insurance though and any other (PII) you may need
If you VAT register, your invoice income will be boosted by 3.4% for the first year, and 2.2% years after that (flat rate scheme) for limited.
Then, when you have a spreadsheet comparing like for like, come & show us the figures! We might believe you then.

[malvolio]

Why not go read the sticky thread from Simon Dolan at the top. It will explain the basic financials far more clearly. Then work out what ist is you're asking and try again. The bottom line is that nothing is more tax-efficient than your own company, assuming you want to stay off Hector's radar, since apart from anything else, any other variant requires a management fee.

[boredsenseless]

You need to do the following:
Spreadsheet -
Umbrella 1 side (giant if you must) - including what they charge to pay you.
Limited the other side- payment on the same means. I would expect you NOT to be paying £1800 in accountancy charges though. (35*52). I - and most on this board would pay FAR less than that!
Payment by the same strategy for umbrella & ltd - salary +divi or whatever
Dont forget to factor in your IR35 insurance though and any other (PII) you may need
If you VAT register, your invoice income will be boosted by 3.4% for the first year, and 2.2% years after that (flat rate scheme) for limited.
Then, when you have a spreadsheet comparing like for like, come & show us the figures! We might believe you then.

I've never really understood IR35 insurance, surely if you think you need it then you are effectively saying that you expect you couyld be IR35. I would use this as a big pointer to a person being not wholly in business in its own right.

Secondly if a major insurer believes your contract is good enough to be worth them covering you then it is going to be watertight, and hence you don't need the cover.

Just a thought